Reprinted with Permission from Bill and Mary Staton’s WOW! Newsletter:
Mary Staton’s “Weekly On Wealth!” Issue #243 06 07 05
Wasting Less by Cutting Back a Bit and Avoiding Credit Card Late Fees
There are many ways to waste less, but today we’re only going to talk about two major things that anyone can do – and as you waste less you will be saving more for your future and feeling relieved in doing so. Nice time of year to feel that way!
The first way is being a wee bit more thrifty with your spending habits, and the second is by adopting several tactics that will help you avoid those dreaded, and frequent, late fees on your credit cards.
To get started, let’s talk about how little things add up.
Assuming you are a smoker, if you spent $7 a day on a pack of cigarettes, in one month you could have instead invested that amount in stocks (10% annual return) and made $240. In 10 years, you’d make $43,017; in 20 years $159,467; in 30 years $474,702; in 40 years $1.3 million and in 50 years you would have a whopping $3.6 million! Having quit smoking, it is more likely that you will live 30-50 more years and be all the richer for it!
Ah, if you gave up the gourmet latte at $3 each day – in a month you could make $90 by investing; in 10 years $18,559; in 20 years $68,999; 30 years $206,091; 40 years $578,693 and in 50 years you’d have $1.6 million in your stock account!
Love bottled water? Instead of paying $1 a day for water, if you had instead invested in equities, in a month you would have accumulated $30; in 10 years $6,145; 20 years $22,781; 30 years $67,815; 40 years $189,815 and in 50 years you’d have over a half-million or $519,732 to be precise!
When USA TODAY recently surveyed 5,000 members of the Financial Planning Association, they listed the two monthly expenses easiest to cut back on. I’m sure you can think of others — like quitting smoking, cutting back on multiple lattes and bottled water each day — that the financial planners didn’t
· Eating one less dinner out 81%
· Buying one less takeout dinner 27%
· Cable TV costs 22%
· Cell phone use 18%
· Gifts 17%
· Other (buying a less expensive car, taking a less extravagant vacation, impulse buying on clothes) 14%
· Buying CDs, books 9%
· Movie rentals 5%
· Computer and software 4%
· Health club membership 4%
You’ve probably used your credit card to pay for a lot of these expenses and I’m sure you’ve noticed three distinct trends with your credit card accounts:
1. Late fees are rising. Increasingly, credit card companies are using a tiered penalty system that depends on the user’s balance, levying, say a $15 late fee for balances below $100 and up to $39 for balances over $1,000.
2. Grace periods are shrinking. You now just have 20 days on average to pay your bill on time, down from 27 days in 1994.
3. Universal default is more common. This allows a credit card company to impose a higher punitive interest rate on your account if you’re late with a payment to another creditor, even if you paid your card issuer’s bill on time!
Being able to avoid credit card late fees can help you give less to the issuers and have more to save for your future. What can you do as an informed consumer about these alarming trends? According to MONEY magazine, here are five solutions to address this problem:
Sit down twice a month to pay bills instead of once, now that grace periods are shorter. And request an easy-to-remember due date, like the first of the month.
Sign up for automatic bill payment, which will take care of the discipline of paying on time. Although specific systems vary, you can typically designate the amount of the payment that will be debited from your checking account.
Call and complain if you’re hit with a late fee but usually pay on time. Many credit card companies will waive late fees at least once for longstanding customers who have good payment records.
Read the fine print to see if your card is subject to universal default. If it is, consider switching to a card that doesn’t have this costly clause in its contract.
This look at how little things add up, some easy things to cut from your spending, and tips on avoiding credit card late fees will help you enjoy this wonderful, slower time of year. And give you more to put away for your future! May you be happy!
Staton Financial Advisors LLC & The Staton Institute Inc.
2431 Hartmill Court Charlotte, NC 28226
I like this advice. It was a real eye-opener. My husband and I now make our mocha’s at home on Sunday morning.
I first was exposed to Bill Staton through a Nightingale Conant tape series called, Life Time Riches. He has developed a very good way of investing in the stock market, which I have shared with several clients. My clients (and mother) report that he is right on target. Even with the stock market dip in early 2005, Bill’s picks stayed strong.
So the Staton’s get a 5-Star recommendation from me.
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